A public company’s repurchasing of its share not only has no sound economic rationale of its own, Lazonick writes in last week’s BusinessWeek. It’s also holding back economic recovery, by limiting much needed investments in other areas, like innovation and job creation.

This is especially true in high-tech, where he notes, Cisco Systems, Intel and HP are among the top 10 buyback miscreants, “each having spent more on buybacks than on research and development from 2000 through 2008.”

Add IBM to the list, which, while spending $73 billion to buy its own stock, “increased its offshore employment by 133,000, reducing U.S. jobs by 36,000.”

Eight of the biggest bank bailees spent a total of $182 billion on buybacks from 2000 to 2007, adds Lazonick. He might have mentioned Wells Fargo & Co. whose board of directors authorized a buyback of 75 million shares in November 2007.

What to do?

How about banning big corporations using buybacks “solely to manipulate their share prices … that help top executives reap outsized pay rewards,” Lazonick suggests.